Facts of the Case

The assessee filed his return of income for Assessment Year 2015-16 on 15.12.2015 declaring total income of ₹24,00,090. The Assessing Officer completed the assessment under sections 143(3) / 144 of the Income-tax Act, 1961, vide order dated 23.11.2017, determining total income at ₹2,76,94,238 by making additions aggregating to ₹2,52,94,148.

The additions primarily included treating the entire amount of sundry creditors for supplies amounting to ₹2,01,51,534 and sundry creditors for expenses amounting to ₹45,38,608 as income. The assessee filed an appeal before the Commissioner of Income Tax (Appeals). However, the learned CIT(A) dismissed the appeal for non-prosecution vide order dated 23.05.2025. Aggrieved, the assessee preferred an appeal before the Tribunal.

Issues Involved

  1. Whether the assessment framed under sections 143(3) / 144 was vitiated due to lack of reasonable opportunity of being heard.
  2. Whether dismissal of the appeal by the CIT(A) for non-prosecution was justified in the facts and circumstances of the case.
  3. Whether additions involving entire sundry creditors could be sustained when the assessment and appellate proceedings were conducted ex-parte.

Petitioner’s (Assessee’s) Position

No one appeared on behalf of the assessee at the time of hearing before the Tribunal. The appeal was therefore decided on the basis of material available on record.

Respondent’s (Revenue’s) Arguments

The Departmental Representative strongly relied upon the assessment order passed by the Assessing Officer and the appellate order passed by the learned CIT(A), contending that the additions were rightly made and confirmed.

Court Order / Findings

The Tribunal observed that both the assessment order and the appellate order were passed ex-parte against the assessee. It was noted that although notice under section 144 was issued fixing compliance on 05.10.2017, the Assessing Officer passed the assessment order on 23.11.2017 without granting any further opportunity, despite keeping the matter pending for a substantial period.

The Tribunal further observed that the learned CIT(A) also did not provide adequate opportunity, as there was insufficient time between issuance of notices and the respective compliance dates. Considering that the assessed income was more than ten times the returned income and that major additions were made in a summary manner, the Tribunal held that the assessee did not get reasonable opportunity during assessment as well as appellate proceedings.

Accordingly, the Tribunal set aside the order of the learned CIT(A) and restored the issues relating to additions back to the file of the Assessing Officer with a direction to pass a de novo assessment order in accordance with law after providing reasonable opportunity of being heard to the assessee. The appeal was partly allowed for statistical purposes.

Important Clarification

The Tribunal clarified that where substantial additions are made ex-parte and the assessee is denied reasonable opportunity at both assessment and appellate stages, the matter must be restored for fresh adjudication. Adequate and effective opportunity of hearing is a fundamental requirement of assessment proceedings under the Income-tax Act.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1770633198_RAMPRAVESHSINGHSONEBHADRAVS.ACITCIRCLE3MIRZAPUR.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.